Methods to Beat ABSD and Own Multiple Properties in 2020 (Updated)

Updated: Sep 5


Are there really methods to save on ABSD in Singapore?

The Additional Buyers Stamp Duty (ABSD) is the bogeyman facing property investors.


Even if you can afford to pay it, the hefty stamp duty gobbles up a huge chunk of your eventual returns.


But is there a “loophole“ or a way around it?


Here are some legal ways to save on ABSD and get started on owning your second or subsequent property:


First, a quick summary of ABSD rates in Singapore to jolt your memory.

Singaporeans and PRs ought to take full advantage to own properties without the full brunt of ABSD. It's our privilege!

Source: Ministry of National Development


The ABSD is a tax applied to residential property purchases in Singapore. The ABSD is a percentage of your property price or valuation, whichever is higher.


Singapore citizens pay ABSD of 12 per cent on their second property purchase, and 15 per cent on the third or subsequent property purchase.


Singapore Permanent Residents pay ABSD of 5 per cent on their first property purchase, and 15 per cent on all subsequent purchases.


Foreigners* pay 20 per cent ABSD on property purchases.


Entities pay 25 per cent ABSD on property purchases (this is relevant if you intend to buy the property through your company. Although this is seldom the approach this days.).


*United States citizens pay the same ABSD rates as Singapore citizens; citizens and Permanent Residents of Iceland, Lichtenstein, Norway, and Switzerland can apply for ABSD remission. This is under FTAs that are in effect at the time of writing. Foreigners should check with their respective authorities on whether their home country’s taxes will also apply on top of the ABSD.


How do you save on ABSD and own multiple properties then?



There are only a few ways to legally save on ABSD:


1. Buying under only 1 owner for a property so that the spouse can buy another under their own name


2. Decoupling an owner from a current property to free up one name


3. "Unofficially" buying under a child more than 21 years old


4. Buying Under A Property Trust under a child below 21 years old


Or as a “left field” alternative, you can consider investing in commercial real estate instead (more on this below)


1. Buying under only 1 owner for a property so that the spouse can buy another under their own name


This is the most straightforward way to have two properties in the family.


When purchasing your first home, such as a flat or condominium, just make sure that you or your spouse is not listed as the co-owner. In the case of a HDB flat, just list them as an occupier.


Take note: Not being listed as an owner means a party's CPF cannot be utilised and incomes cannot be considered upon for loan applications.


This also means that only the listed owner is obliged by law to pay the mortgage (You would have to work out between yourselves how to split the monthly bills.)


Later on, when your spouse purchases a private property, they can do so as a first-time home buyer and not pay ABSD (or only pay five per cent ABSD if they are a Permanent Resident).


The considerations for this method are:


- Only the CPF Ordinary Account funds of the sole owner can be used.


- The sole owner must meet the income requirements to qualify for the home loan.


For brand new executive condominiums and HDB flats, the loan repayments cannot exceed 30 per cent of the sole borrower’s gross monthly income (This is known as Mortgage Servicing Ratio).


For private properties and resale executive condominiums, the home loan – plus all existing debt obligations – cannot exceed 60 per cent of the sole borrower’s gross monthly income. (This is known as Total Debt Servicing Ratio).


There must be acceptance between all parties that, legally speaking, the sole owner is the one who holds the deed to the property; even if in reality their partner contributes as much or more to the mortgage.


Typically, I would recommend that the higher income owner would hold the higher value property.


Apart from qualifying for the loan, this would support future portfolio growth plans when you gear up a property and free up equity when it appreciates in value.



2. Decoupling an owner from a current property to free up one name



This is when one co-owner transfers their share of ownership of the property to the other co-owner(s).


When the exiting party buys a property, they will then be counted as a first-time home buyer.


Note that married couples cannot decouple in this way for HDB flats as the loophole in granting frivolous transfer of ownership to one party has been shut off on May 4 2016.



Decoupling has been a commonly used method as many married couples in the past, before the implementation of ABSD, bought homes under both names as a norm.


It is simply the removal of 1 owner from the property through the "buy out" by the other party. It is sometimes known as part-sale or part purchase too.


More recently, there are permutations that evolved as a consequence of insufficient financing abilities.


For example:


Say you and your spouse purchase a private property as tenants-in-common.


This allows you to split ownership of the property. The common form of this holding method is to split the ownership 99-1 (e.g. your spouse owns 99 per cent, while you own 1 per cent).


The immediate benefit of doing so is that both incomes can be used to support the home loan application and both parties' CPF Ordinary Account funds can be used for the down payment and ongoing mortgage installments.


A few years later, assuming you have saved up the funds to invest in a second property.


You would then sell your 1 per cent ownership to your spouse, who incurs a Buyer Stamp Duty (BSD) only on the value of the 1 per cent being transferred.


This amount must be paid first in cash before it can be redeemed through CPF.


If it happened within 3 years, you will incur a Seller Stamp Duty (SSD) of 4-12% depending on the year of transfer. This amount must be paid through cash.

This is why most people don't opt for splits like 50-50, as it would incur a much higher Buyer Stamp Duty/Seller Stamp Duty when they make the transfer.

Other fees that are usually incurred in the decoupling process include, conveyancing fees for the appointment of 2 lawyers representing each party (Yes, the law requires that one act for the seller and another act for the buyer) and possibly mortgage loan restructuring fees and penalties.


After the exercise of the sale, the exiting party can then move on to buy another private property as a first-time home buyer without incurring ABSD.


There is no need to wait for the completion of the decoupling process before buying into the new property.


The considerations for this method are:


- You must have sufficient cash/CPF to return the exiting party's CPF used plus accrued interest (Unless you have obtained a written reply by CPF that allows a waiver of this refund.)


- You must also have sufficient income to take over the full loan single-handedly.


If you have insufficient funds to do so, there are creative financing methods that can help you achieve that such as pledging of assets and some other less orthodox methods, which are frankly, not suitable to be written about lest i get unnecessary heat from the authorities.


I will cover some of the "document-able" methods in a creative financing techniques article separately.

Examples of the Property Wealth Planning solutions that help clients save on ABSD and optimise returns on investment

Going back to topic, you would need to accept that a manner of holding such as 99-1 may not reflect the reality of the situation (e.g. you might be paying most of the mortgage even if you’re the 1 per cent holder).

This is usually not a big deal at the point of purchase, but it could be in cases of dispute or divorce.


Two conveyancing law firms would be needed to handle the decoupling; this can take approximately 4-6 weeks, and costs a total of S$5,000-6000/-.


A word of caution: It is important for you to work with experienced and up to date CONVEYANCING LAWYERS.

Not all lawyers specialise in conveyancing, though some claim to do it when they only do a handful of conveyancing deals over the years. If you hire someone with the wrong expertise, it may cost you alot more pain, financially and emotionally, than you can imagine.



3. "Unofficially" buying under a child’s name


This is when your child (Must be more than 21 years of age) purchases a private property under their name; but you provide the cash to make the down payment.


As a first-time home buyer, a Singaporean would not have to pay the ABSD.


While it sounds easy, this method can result in complications down the road.


The 1st potential blind spot is that your children now count as private property owners. If they were to get married and buy a private property of their own, you’ll have to either dispose of or transfer the property back to you with ABSD payable (or else foot the bill for ABSD on their actual matrimonial home).


If they were to buy a Build To Order (BTO) flat or Executive Condominium , they would have to dispose the private property at least 30 months ahead of their application, so advanced planning is required.


I have come across an interesting case where the son-in-law of a wealthy client became upset when he found out that they couldn't buy a BTO flat due to his wife owning a 1 bedroom apartment given to her by her dad.


The 1 bedroom apartment was too small for them to live in and they could not sell the property yet due to Seller Stamp Duty and a lack of profit; which in turn affected their plans.


The second blind spot is that your children have to qualify for the mortgage loan.


In order to do so, they would have to have sufficient income proof as their parents' are not the owners and their incomes cannot be included in the loan application.


If they are not working yet, this might not be a feasible solution although there are "un-documentable" workarounds.


The third blind spot is one of trust.


Your children legally own the property; they can sell it, use it as collateral for a loan, call the shots on who stays in it, etc.


This can result in some ugly family disputes, some of which end up in court.


So, while this may seem like an easy way to save on ABSD, it is important to discuss and anticipate all possible issues that may arise in the future.


I have found through experience that verbalising and documenting potential pitfalls, and walking clients through this discussion always gives them alot more clarity and assurance on their options later on.



4. Buying Under A Property Trust for children below 21 years old


This is a method for the cash rich as it requires sufficient cash to purchase the property without a loan or CPF usage.


With this method, you can set up a property trust for your child below 21 years old, and buy a property under it with you as the Trustee.


Legally speaking, the property you buy in this way is not “yours”, it belongs to the beneficiary (your child).


Obviously, you are liable to pay for any taxes and expenses on the property.


However, as you are not legally the owner of this property, it does not add to your property count. This means if you were to buy a second home with this method, you wouldn’t be subject to ABSD.


As an added bonus, debtors cannot seize the property from you if you’re ever, say, declared bankrupt (touch wood).


In the eyes of the law, the property is not “yours”.

Therefore, note that this means the property – along with any rental income or sales proceeds if sold – belongs to your child and not you. (This can be circumvented with a joint account existing in both your names though.)


In addition, banks do not grant loans for properties under a trust, so be prepared to pay for the full property value in cash plus Buyer Stamp Duties.


For the creative ones, you might be thinking, why can't i set up a trust under my above 21 year old child?


Well, conveyancing law firms generally do not take up cases of a property trust set up for a normal child who is past 21 years old, the age of majority, as it implicates them in abetting ABSD avoidance.


Finally, you could consider investing in commercial and industrial real estate, if you’re ready to take the plunge


Commercial and industrial real estate is a whole different ball game from residential properties and requires alot more research and understanding.


Segments such as shophouses, retail fronts, F&B outlets, offices and industrial B1/B2 sites all carry different risks and returns which aren't suitable for everyone.


Nonetheless, they are only subject to GST (If the seller is GST registered) and there’s no ABSD payable on them.


Which method works best for you?


There isn’t a single best method, as a lot of it depends on your financial situation, family profile and plans.


In fact, there are advanced structuring strategies that consist of layering methods in different orders (Document-able & un-documentable ones) to help investors own more properties, obtain higher financing and save on tax and expenses.


However, as they are more complex in nature, they are less suitable to be written for the masses.


If you do need advice on such matters though, feel free to reach out below to schedule a video consultation.

Need an opinion on your property investment plans, the best buys available or help marketing your properties?


Get a 1-time free 30 min Property Wealth Planning consultation. Schedule one right now.


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Stuart Chng, Senior Associate Executive Director of OrangeTee & Tie, is a renowned leader and personality in the real estate industry.


He adores music and can play a few instruments decently without upsetting his neighbours. When not doing so, he enjoys pillow fighting with his son and coming up with silly puns which barely amuses his wife.

Professionally, he is a licensed real estate agent, investor, team leader, speaker and columnist for several property newsletters and blogs and is often quoted in media interviews on 938FM, Channel 8, PropertyReport, PropertyGuru and other publications. Throughout his career, he has helped many clients grow their wealth through selecting great property investments and managing their portfolios actively. Read his clients' reviews here.


Stuart has also coached many top million dollar producing agents from different real estate agencies in Singapore. Read his agents' reviews here.

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